RR Donnelley and Moore Wallace Agree to Combine Moore Wallace CEO
Mark A. Angelson To Lead the New RR Donnelley CHICAGO, TORONTO and
NEW YORK, Nov. 9 /PRNewswire-FirstCall/ -- RR Donnelley and Moore
Wallace Incorporated (NYSE: MWI; TSX: MWI) today announced that
they have signed a definitive agreement to create the world's
premier full-service commercial printer with over $8 billion in
annual revenues, a leading position in North America and
approximately 50,000 employees worldwide. The combined company will
provide customers with the industry's broadest array of
high-quality, long- and short-run print products and solutions,
from magazines, telephone directories, books, catalogs, inserts and
financial documents, to billing statements, outsourced customer
communications, highly personalized direct mail, premedia, print
fulfillment, labels, collateral materials, forms and logistics
services. The Boards of Directors of both companies have
unanimously approved the agreement. The combined company will
retain the RR Donnelley name and will be headquartered in Chicago.
Upon closing of the transaction, Mark A. Angelson, Chief Executive
Officer of Moore Wallace, will become CEO of the new RR Donnelley,
succeeding William L. Davis, Chairman, President and CEO of RR
Donnelley. Mr. Davis announced in July 2003 his intention to retire
when a successor was identified. Longtime RR Donnelley Director
Stephen M. Wolf is to become non-executive Chairman of the Board of
the combined company. Under the terms of the transaction, Moore
Wallace shareholders will receive RR Donnelley shares based on a
fixed exchange ratio of 0.63 of a RR Donnelley share for each Moore
Wallace share. This represents $US17.66 in value per Moore Wallace
share, or approximately $2.8 billion in total equity value, a
premium of 16%, based on the closing stock prices of both companies
on the New York Stock Exchange (NYSE) on Friday, November 7, 2003.
RR Donnelley will assume approximately $900 million in Moore
Wallace debt. The combined company will be traded on the NYSE under
the ticker symbol DNY. Upon completion of the transaction, RR
Donnelley and Moore Wallace shareholders will own, respectively,
approximately 53% and 47% of the combined company. RR Donnelley is
expected to maintain an investment grade credit rating and to
maintain its annual dividend of $1.04 per share. RR Donnelley and
Moore Wallace will contribute eight and seven directors,
respectively, to the combined Board. The transaction is expected to
be accretive to RR Donnelley's earnings in the first full year of
operations, excluding the impact of transaction-related charges. In
addition to significantly enhanced revenue opportunities, the
combined company expects to generate cost savings of at least $100
million on an annualized basis in the first 12-24 months after the
closing. These savings are anticipated to result from the
elimination of duplicative administrative and infrastructure costs,
reduction in procurement expenses, and asset rationalization. The
combined company is also expected to generate substantial cash flow
in the first year of consolidated operations. William L. Davis,
Chairman, President and CEO of RR Donnelley, said, "Today's
announcement is a tremendously positive step forward in the
continued evolution and development of RR Donnelley. The
transaction will place the new RR Donnelley among the Fortune 250.
It is great news for our customers, our employees and our
shareholders. I am especially pleased that Mark Angelson will be
leading this company and look forward to a smooth transition." Mark
A. Angelson, CEO of Moore Wallace, said, "This transaction is
strategically and financially compelling, bringing together the
industry's most established and highly regarded companies and the
industry's most advanced technologies to create a dynamic new
business platform. The combination will enable the new RR Donnelley
to offer the world's leading companies a comprehensive suite of
print and related products and solutions that will meet the demands
of our growing customer base. Through this combination, the new RR
Donnelley will serve leading global, national, regional and local
customers and will provide every printing need a company of any
size could require." Mr. Angelson continued, "With a broad base of
highly profitable businesses and a strategic approach to managing
our capital, the new RR Donnelley will generate substantial cash
flow after servicing the dividend and making disciplined capital
expenditures. We will continue our commitment to use that cash flow
on an accretive basis." Stephen M. Wolf, a Director of RR
Donnelley, said, "Together, these two storied companies will have
the scale and financial strength to compete successfully well into
the future. Mark is a highly respected and superb leader with a
solid track record in delivering growth and shareholder value,
while maintaining a strong focus on customer satisfaction. The
Board and I believe that he is the right person to take the
combined company forward and deliver on its promise to all of its
constituencies. I very much look forward to working with him in the
years ahead." Alfred C. Eckert III, Chairman of the Moore Wallace
Board, said, "We have created considerable equity for our
shareholders and the prospects are excellent for continuing to
build significant value. I am enthusiastic about this transaction
and its potential. I look forward to serving on the Board of the
new RR Donnelley and to chairing its newly-created Executive
Committee." The transaction is subject to approval by RR Donnelley
stockholders and Moore Wallace shareholders, and Ontario court
approval of a plan of arrangement, which will provide for the
compulsory exchange of each outstanding share of Moore Wallace for
0.63 of a RR Donnelley share. In addition, the transaction is
subject to anti-trust clearance and Investment Canada approval, and
is expected to close in the first quarter of 2004. The transaction
is intended to qualify as a tax-free reorganization for U.S.
federal income tax purposes. It is expected to be taxable to
Canadian shareholders of Moore Wallace. Morgan Stanley provided
mergers and acquisitions advice to RR Donnelley. Sidley Austin
Brown & Wood LLP and Stikeman Elliott LLP provided legal
counsel to RR Donnelley. Goldman, Sachs & Co. provided mergers
and acquisitions advice to Moore Wallace. Sullivan & Cromwell
LLP and Osler, Hoskin & Harcourt LLP provided legal counsel to
Moore Wallace. A conference call discussing the transaction will be
held on Monday, November 10, 2003 at 8:00 a.m. (CST) or 9:00 a.m.
(EST). The toll-free dial-in number is 888-735-8703 and the number
for participants located outside the U.S. is 706-634-6309. The U.S.
replay number is 800-642-1687 (706-645-9291 for international
participants) and for all participants wishing to listen to the
replay the access code is 3926061. A replay of the call will be
available from 11:00 a.m. (CST) or 12:00 p.m. (EST) on November 10,
2003 to 11:00 a.m. (CST) or 12:00 p.m. (EST) on November 17, 2003.
A slide presentation and live audio webcast of the call will also
be available and archived on both companies' web sites at
http://www.rrdonnelley.com/ and http://www.moorewallace.com/. About
RR Donnelley RR Donnelley (http://www.rrdonnelley.com/) prepares,
produces and delivers integrated communications across multiple
channels for content owners, such as publishers, merchandisers, and
telecommunications companies as well as capital markets and
diversified financial services companies. As a single source
supplying services up and down the communications value chain, the
company excels in digital photography, content management,
printing, online services, and print and package logistics. With
these integrated services, RR Donnelley provides effective
solutions for its customers' targeted communications and delivery
needs. Headquartered in Chicago, IL, RR Donnelley serves a global
customer market and has 30,000 employees in more than 200 locations
in North America, South America, Europe and the Asia/Pacific Basin.
About Moore Wallace Moore Wallace is a leading single-source
provider of print management and outsourced communications,
delivering to its customers one of the widest array of products and
services at one of the lowest total costs. The company operates in
three complementary business segments: Forms and Labels,
Outsourcing and Commercial Print. The Forms and Labels business
designs, manufactures and sells paper-based and electronic business
forms and labels and provides electronic print management
solutions. The Outsourcing business provides high-quality,
high-volume variably imaged print and mail, electronic statement
and database management services. The Commercial Print business
produces high-quality, multi-color personalized business
communications and provides direct marketing services, including
project, database and list management services. For more
information, visit the company's web site at
http://www.moorewallace.com/. This news release contains statements
relating to future results of the combined company including
statements (i) as to expected annual revenues of the combined
company of $8 billion, (ii) that the transaction will be accretive
to the combined company's earnings in the first year of operations,
excluding the impact of transaction-related charges, (iii) as to
the expected generation of at least $100 million in cost savings in
the first 12-24 months after the closing, on an annualized basis,
(iv) that the combined company will generate substantial cash flow
in the first year of consolidated operations, and (v) as to the
expected maintenance of the annual dividend, as well as other
anticipated, believed, planned, forecasted, expected, targeted and
estimated results and the combined company's outlook concerning
future results, that are "forward-looking statements" as defined in
the U.S. Private Securities Litigation Reform Act of 1995. Readers
are cautioned not to place undue reliance on these forward-looking
statements and any such forward- looking statements are qualified
in their entirety by reference to the following cautionary
statements. All forward-looking statements speak only as of the
date hereof and are based on current expectations and involve a
number of assumptions, risks and uncertainties that could cause the
actual results to differ materially from such forward-looking
statements. Factors relating to the completion of the transaction
and the integration of the businesses that could cause material
differences in the expected results of the combined company
include, without limitation, the following: the development and
execution of comprehensive plans for asset rationalization, the
ability to eliminate duplicative overhead without excessive cost or
adversely affecting the business, the potential loss of customers
and employees as a result of the transaction, the ability to
achieve procurement savings by leveraging total spending across the
organization, the success of the organization in leveraging its
comprehensive product offering to the combined customer base as
well as the ability of the organization to complete the integration
of the combined companies without losing focus on the business. In
addition, the ability of the combined company to achieve the
expected revenues, accretion and synergy savings will also be
affected by the effects of competition (in particular the response
to the transaction in the marketplace), the effects of paper and
other raw materials and fuel price fluctuations and shortages of
supply, the rate of migration from paper-based forms to digital
formats, the impact of currency fluctuations in the countries in
which RR Donnelley and Moore Wallace operate, general economic and
other factors beyond the combined company's control, and other
risks and uncertainties described from time to time in RR
Donnelley's and Moore Wallace's periodic filings with United States
and Canadian securities authorities, as applicable. This
communication is not a solicitation of a proxy from any security
holder of Moore Wallace or RR Donnelley. Moore Wallace and RR
Donnelley intend to file a Joint Management Information Circular
and Proxy Statement regarding the proposed transaction with the
U.S. Securities and Exchange Commission (SEC) and the securities
commissions or equivalent regulatory authorities in Canada. WE URGE
INVESTORS IN RR DONNELLEY AND MOORE WALLACE TO CAREFULLY READ THE
JOINT MANAGEMENT INFORMATION CIRCULAR AND PROXY STATEMENT WHEN IT
BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION
ABOUT RR DONNELLEY, MOORE WALLACE AND THE PROPOSED TRANSACTION.
Investors will be able to obtain the documents free of charge at
the SEC's website, http://www.sec.gov/, and at the website of the
Canadian System for Electronic Document Analysis and Retrieval
(SEDAR) maintained by the Canadian Securities Administrator at
http://www.sedar.com/. Documents filed with the SEC by RR Donnelley
will be available free of charge from Investor Relations, RR
Donnelley, 77 West Wacker Drive, Chicago, IL 60601, Tel. (312)
326-8926. In addition, documents filed with the SEC by Moore
Wallace will be available free of charge from Moore Wallace, One
Canterbury Green, Stamford, CT 06901, Attention: Investor
Relations, Tel. (203) 406-3749. RR Donnelley, Moore Wallace and
their executive officers and directors may be deemed to be
participants in the solicitation of proxies from RR Donnelley and
Moore Wallace security holders in favor of the proposed
transaction. Information regarding the security ownership and other
interests of RR Donnelley's and Moore Wallace's executive officers
and directors will be included in the Joint Management Information
Circular and Proxy Statement. Satellite coordinates for RR
Donnelley-Moore Wallace b-roll: When: Sunday, November 9, 2003
Time: 6:30-6:45 PM ET Coordinates: Telstar 6, Transponder C-15, DL:
4000 (V) When: Monday, November 10, 2003 Time: 10-10:30 AM ET (fed
in rotation) Coordinates: Telstar 6, Transponder C-22, DL: 4140 (H)
When: Monday, November 10, 2003 Time: 1:30-2:00 PM ET (fed in
rotation) Coordinates: Telstar 5, Transponder C-19, DL: 4080 (V)
Contacts: RR Donnelley Moore Wallace Investors: Investors: Lisa
Mount: 312-326-8926 Julie Gottlieb: 203-406-3825 Media: Media:
Katherine Divita: 312-326-8336 Abernathy MacGregor Group or Steve
Frankel/Kenny Juarez Citigate Sard Verbinnen 212-371-5999 or
917-324-3922 Judy Brennan: 312-895-4700 Jonathan Gasthalter:
212-687-8080 DATASOURCE: RR Donnelley; Moore Wallace CONTACT:
Investors - Lisa Mount, +1-312-326-8926, or Media - Katherine
Divita, +1-312-326-8336; or Judy Brennan, +1-312-895-4700, or
Jonathan Gasthalter, +1-212-687-8080, both of Citigate Sard
Verbinnen, all for RR Donnelley; Investors - Julie Gottlieb,
+1-203-406-3825, or Media - Steve Frankel, +1-212-371-5999, or
Kenny Juarez, +1-917-324-3922, both of Abernathy MacGregor Group,
all for Moore Wallace Web site: http://www.rrdonnelley.com/
http://www.moorewallace.com/
Copyright
